Major lenders, including State Bank of India (SBI), ICICI Bank and HDFC Bank, on Friday raised their lending and deposit rates by up to 100 basis points on the eve of the New Year. While the hike in lending rate would make auto, home and commercial loans expensive, increase in deposit rates will ensure better returns for depositors.
In line with market trend, SBI announced an increase in its base rate or the minimum lending rate by 40 basis points to 8 per cent. The fixed deposits with SBI would fetch higher interest. The bank would give highest return of 9 per cent for deposits of 555 days and 1,000 days, up from 8.5 per cent. The highest increase of one percentage point was in fixed deposits with maturity between 7 days 14 days. Short-term FDs would fetch an interest rate of 4 per cent against the existing 3 per cent. SBI also raised the benchmark prime lending rate by 25 basis points to 12.75 per cent. This will make EMIs for the existing loan dearer by at least 25 basis points. The new rates, SBI in a statement said, would be effective from January 3, 2011.
Meanwhile, HDFC Bank has decided to increase its Base Rate by 25 basis points to 7.75 per cent effective Saturday. Besides ICICI Bank, private sector lenders Kotak Mahindra Bank and Dhanlaxmi Bank also increased their base rates by up to 75 basis points. ICICI Bank has announced an increase of half-a-percentage point in the Base Rate with effect from January 3. The revised rate will be 8.25 per cent as against 7.75 per cent at present, the bank said in a statement. ICICI Bank has also announced an increase of 25 basis points in its benchmark prime-lending rate (BPLR) and Floating Reference Rate (FRR) for consumer loans (including home loans) with effect from January 3. The bank said fixed rate customers would not be impacted by the above increase and their contracted rates would remain unchanged.
Source : Taxguru